On September 15, 2016, the Scottie Company board of directors declared a 10% sto

Question

On September 15, 2016, the Scottie Company board of directors declared a 10% stock dividend on common shares. The shares are to be distributed on October 10, 2016, to shareholders of record on October 1, 2016. The market price per share on the date of declaration was $24.9 while the market price on the date of distribution was $26.9. The common stock has a par value of $5 per share and there were 1,450,000 shares outstanding prior to the declaration of the stock dividend. Required: Prepare any necessary journal entries to record the above transactions.

transaction list×

1.

Record declaration of common stock dividend.

2.

Record the entry on date of record.

3.

Record issuable of common stock dividend.

Explanation / Answer

No of common stock outstanding      1,450,000 No of stock issues as dividend @10%=          145,000 Par value                         5 Price per share issued as dividend =               24.90 Accounting Entry Date Account Title Dr $ Cr $ Sep 15.2016. Retained Earning      3,610,500 Stock Dividend Payable      3,610,500 ( Stock dividend declared) Oct 1.2016. No entry required. ( record the entry on record date) Oct 10.2016. Stock Dividend Payable      3,610,500 Common Stock          725,000 Paid in Capital in excess of Par -Common stock      2,885,500 ( issue of stock dividend)

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